UK's Cameron plays down status of top credit rating

Sun Jan 6, 2013 7:37am EST
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LONDON (Reuters) - British Prime Minister David Cameron said the credibility of his deficit-cutting policy was more important than the judgment of credit rating agencies, as the threat of third recession since the financial crisis looms.

Britain has held onto its top triple-A credit rating while the United States and France have suffered downgrades, but that endorsement has looked increasingly shaky as the economic outlook darkens.

A loss of the rating would be a blow to Cameron and his Conservative-led coalition, which has staked its political reputation on maintaining the top rating and nursing Britain's economy back to health by cutting its deficit.

Cameron told BBC television on Sunday the opinion of the international debt markets was more significant than a credit rating.

"What matters most of all is are you able to pay your debts, maintain your debts at a low rate of interest," he said.

"The ratings you have are all hugely important, but in a way the real test is, what are the interest rates the rest of the world is demanding in order to own your debt."

Ministers have been increasingly playing down the significance of credit ratings as the economy struggles and the crisis in the euro zone, Britain's largest trading partner, reduces the near term prospects for growth.

Cameron said the key to keeping the faith of financial markets was the government's program of cutting state spending to bring its deficit under control.

"You can only keep your interest rates low if you have a credible strategy for getting on top of your deficit and getting on top of your debt," he said.   Continued...

Britain's Prime Minister David Cameron (L) speaks on the BBC's Andrew Marr Show in London January 6, 2013. REUTERS/Jeff Overs/BBC/Handout